Small businesses, insurers fight back against health insurance tax

Proposed bill would repeal it

Small business groups are fighting back against the Patient Protection and Affordable Care Act’s health insurance tax and throwing their support to new legislation that would repeal it, arguing that the tax will kill a lot of private sector jobs.

The National Federation of Independent Business Research Foundation on Tuesday released an updated study predicting that the rise in cost of employer-sponsored insurance stemming from the tax will result in a reduction in private sector employment of 146,000 to 262,000 jobs by 2022, with 59 percent of the job losses coming from small businesses.

This will amount to a reduction of U.S. sales by between $19 billion to $35 billion during the same time frame, the nonpartisan small business association finds. A similar study released in 2011 predicted a loss of 125,000 to 249,000 jobs and $18 to $30 billion in sales by 2021.

Starting next year, the health insurance tax is set to raise about $100 billion over 10 years to help pay for the coverage expansion in the health care law, the bulk of which will probably come from private insurance.

Opponents argue that the fees would be largely passed through to consumers in the form of higher premiums for private coverage.

“Singling out job creators for tax increases when unemployment is still a major hurdle for our economy is short-sighted and wrong for our nation’s growth,” says Susan Eckerly, NFIB senior vice president of federal public policy. “We need to do all that we can to increase jobs, not reduce them.”

The NFIB, along with other groups including America’s Health Insurance Plans, praised U.S. Sens. John Barrasso, R-Wyo., and Orrin Hatch, R-Utah, for a bill they reintroduced Tuesday to kill the tax. U.S. Reps. Charles Boustany, R-La., and Jim Matheson, D-Utah, introduced similar House legislation last month.

“Higher insurance costs, fewer jobs and smaller paychecks is not what President Obama promised when he signed the largest expansion of government into law nearly three years ago, but that’s exactly what’s already happening,” Hatch said in a statement.

AHIP also threw its support to the senators’ Jobs and Premium Protection Act.

“Taxing health insurance makes it more expensive, and that is the opposite of what health care reform was supposed to accomplish,” AHIP President and CEO Karen Ignagni said in a statement Tuesday.

“This tax alone will mean that next year individuals purchasing coverage on their own will pay $110 in higher premiums and small employers will pay an additional $360 for each family they cover. Families and small businesses simply cannot afford to pay an additional $100 billion sales tax on their health insurance at a time when they are already struggling to keep up with rising medical costs,” she said.

A group of small business owners, their employees and the self-employed also have formed a coalition called “Stop the HIT,” that has been working to repeal the tax.